The instrument, denominated in US $, will be fully repatriated. Sources in SBI said that the bond is likely to have a five-year maturity and carry an attractive market-driven interest rate. It will carry tax concessions similar to those currently available to NRI deposits. The proceeds of the bond will be used to fund infrastructure projects.

The State Bank management is bullish about the success of the India Resurgent Bond. According to a highly placed source in SBI, "The open-ended fund will be the most attractive feature of the scheme as it will provide an exit route option and NRI investors will be able to move in and out of the bond fund."

SBI Caps managing director AR Barwe told The Indian Express: "We are confident that we will be able to raise more than $ 1billion within a period of two months. Since SBI has been given the mandate to issue the NRI bonds, we will be structuring the bond and handling the entire issue. These bonds will give fixed returns which will be tax-free and will be denominated in US $ which is the most attractive sop for the NRI. The funds collected through this bond will be invested in infrastructure projects."

According to SBI officials, the interest rate for India Resurgent Bond is likely to be a fixed rate. "The floating rate may not be an attractive option for NRIs," sources said.

The tax exemption on the bond will be similar to exemptions currently offered on the foreign currency loans.